Aa Car Warranty
Car Finance - How To Decide On Whether To Lease Or Buy A New Car
The question of whether car leasing is better than car buying seems to generate significant and animated debate. The two camps and their armies of supporters have some zealots that consider it sacrilegious to think of the alternative. The truth is, that like anything the answer to "what is best?" depends on the car shopper's needs and wants. Once these are determined, then he/she can apply some basic maths to determine whether or not buying or leasing is best.
Now that you have answered the above, the following is a rough and simple mathematical calculation that can tell you the benefit of leasing the car that you want or need versus buying a car. What is critical to this is how much the car that you want to drive is likely to depreciate across the period that you want to drive or own the car. If we assume 3 years then you need to: (i) Obtain the likely future value of the car after 3 years (you can get this from the AA website which states on average most cars depreciate 60% over 3 years); (ii) Deduct the future value from the current retail price to obtain the 'depreciation amount'; (iii) Take the depreciation amount and use a car finance calculator and add 8.9% APR to get total lease payment then, divide this by 36 months to get the rough monthly payment for that car if you leased it. Example Audi A4 costs 29, 000 and assume it will depreciate 30% over 3 years = 8, 700 (Audis are renowned for lower than average depreciation). Add 8.9% APR and monthly payments on a lease would be approximately 277.00 each month for 36 months. If you compare this to buying the Audi A4 on a personal loan on the same APR, you will have a monthly payment of 920.84 for 36 months. Therefore, the question for you now becomes, is the want of owning the Audi A4 worth an extra 643 per month? If you buy the car, across 3 years you will pay a total of 33, 150 for an asset worth 20, 300 that will also be out of warranty at the end of year 3. Leasing compares really well for cars that have lower than average depreciation. A helpful tool that gives instant comparison of car finance for leasing and buying for all cars is on www.FinanceAcar.co.uk By Simon Norman -
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